Sprint Loss Less Than Expected Post Layoff News

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January 26, 2016 @ 10:59

Sprint on Tuesday reported a smaller-than-expected loss for the third quarter (Oct.-Dec.) of its 2015 fiscal year, with the addition of 501,000 net postpaid connections and its lowest-ever churn rate for a third quarter.

The latest earnings report comes as the carrier executes a $2.5 billion cost-cutting plan. Bloomberg on Monday reported Sprint is eliminating approximately 2,500 jobs, or 7 percent its workforce, as part of the turnaround.

Sprint posted a net loss of $836 million in the third quarter, compared to a $2.38 billion loss in third-quarter 2014. Net operating revenue totaled $8.1 billion, compared to $9 billion in the year-ago quarter.{ad}

The year-over-year revenue drop resulted from lower wireless service revenue, primarily related to customers shifting to rate plans associated with device financing options, as well as lower equipment revenue due to a shift from installment billing and subsidized sales.

“It’s clear from our quarterly results that we are making great progress on achieving our goals,” said Marcelo Claure, Sprint’s CEO. “Revenue has stabilized, costs are coming out faster than expected, postpaid phone net additions were the highest in three years, postpaid churn was the lowest ever for a third quarter, and the network is performing at best-ever levels.”

Sprint says it remains on track to exceed its cost-reduction target for fiscal 2015 and has realized a nearly $800 million reduction in cost of service and selling, general and administrative expenses year-to-date, including $500 million in the third quarter. It expects approximately $1 billion in transformation program costs, to be split relatively evenly between operating expenses and capital expenditures, to be incurred across fiscal 2015 and 2016.

“Our transformation is taking hold and the momentum is accelerating,” said Tarek Robbiati, Sprint’s chief financial officer. “Most importantly, we expect these cost reductions to be achieved without compromising network quality or impacting the customer experience.”

For the third quarter, postpaid phone net additions were 366,000 compared to net losses of 205,000 in the prior year quarter – an improvement of 571,000 year-over-year. Prepaid net losses totaled 491,000 compared to net additions of 410,000 in the prior year quarter – a decline of 901,000 year-over-year.

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